want a woman here," she said, pointing to her knee. She smiled even more broadly, look- ing around the room at her admiring guests. "I wish my husband could be here, to see me being interviewed," she said. T he broader shift toward the profit model began in the nineties, when Acción International, a network of Latin- American institutions, concluded that commercialization was the only way mi- crofinance could serve large numbers of people, because commercial enterprises could tap the capital markets for the funds they needed to grow. In 1992, Bolivià s BancoSol, an Acción affiliate, trans- formed itself from a nonprofit into the first private commercial bank in the world dedicated exclusively to microfinance- and dozens of other institutions have followed. "Acåón created the commeråal model, and the commercial model is the one that works," the organization's president, Maria Otero, declared. She and Pro Mujer's Car- men Velasco were schoolgirls together in Bolivia, and their fathers were best friends. Now they are on opposite sides of this small, fractious community. "Pro Mujer is performing well, and it could become a commercial bank," Otero told me. "But Carmen believes becoming commercial will dirty you with the 'P' word of profit. She thinks it will compromise the pro- gram." Otero thinks that nonprofits don't have much of a future in microfinance. The debate is about much more than purity of motives. The Y unus faction wor- ries about "mission drift," saying that, as the drive for profitability increases, only the so-called "less poor" (as opposed to the very poor) will qualify for loans. "On the one side, there are the people saying, es- sentially, We want to be Citigroup for poor people," said Jonathan Lewis, the C.E.O. of MicroCredit Enterprises, which provides loan guarantees from wealthy donors to institutions that serve mainly the poorest women. "But, on the other side, we're saying, We didn't start this to become a bank We started this to end poverty. So wè re going to experiment with all the different ways, profitable or not, that we can work with our constitu- encies-who are our customers, not our shareholders. If your core mission is to provide a channel out of desperate pov- erty, it creates a different set of questions than if your mission is to create a global market in microfinance futures." Hyperbole distorts the debate on both sides. Muhammad Yunus speaks elo- quently about eradicating poverty, but some advocates of commercialization argue that microcredit burdens the very poor with debt, and that the less poor are the only appropriate customers. Since rel- atively few rigorous studies on the impact of microfinance have been completed, ide- ology tends to dominate. Jonathan Mor- duch, a professor of public policy and eco- nomics at New York University's Wagner Graduate School of Public Service, who has studied the field for more than a de- cade, said that there is clear evidence that microfinance can help the very poor, but he added that "credit alone is not a pana- cea." He emphasized the success of groups that combine lending with other initia- tives, such as education and health care. And although the lives of individuals have improved, loans to the poor have not yet had a demonstrable effect on aggre- gate poverty levels. "The boldest claim for microfinance-that it can single-handedly eliminate a large share of world poverty- outpaces, by a long distance, the evidence accumulated to date," Morduch told me. Mter the announcement ofYunus's Nobel Prize, some in the microfinance community worried that exaggerated claims about microfinance would lead eventually-when unrealistic expecta- tions were not met-to the discrediting of the field. Outside critics have argued that microfinance is merely a palliative measure, which does nothing to bring about the large societal reforms neces- sary to reduce poverty-and even serves to preserve the status quo, by making the lives of the poor more tolerable. "That is a valid critique, to a point," Morduch said. "But get real. How long are you willing to wait for the revolu- tion? I can't see any moral foundation for not trying to address the current de- privations of the world's poorest billions. If microfinance can help provide options in cost-effective ways, we should cele- brate it." The United Nations designated 2005 the International Year of Micro- credit, and this was primarily intended to encourage policymakers to support favorable regulatory environments. But even the title provoked bitter fighting. Shouldn't it be the Year of Microfinance? Acción and other profit-minded groups demanded that the name be changed. So did a World Bank affiliate, the Con- sultative Group to Assist the Poor (CGAP), a consortium of government and private development organizations working to expand micro finance. When CGAP was created, in 1995, the "P" stood for "poor- est" -something for which Y unus had lobbied hard. In 2003, "poorest" was re- placed with "poor." ("Their explanation was that the poorest can't handle credit, so we should be looking only at the upper part of the poor," Y unus said. "That was absolutely against the intention of the cre- ation of CGAP .") In the end, at the insis- tence of developing countries-Bangla- desh in particular-"microcredit" retained its place in the name, but Secretary-Gen- eral Kofi Annan used the word "microfi- nancè' in his opening statement. A few years ago, Pierre Omidyar left Silicon Valley and moved his fam- ily to Henderson, Nevada, just outside Las Vegas. A slight, unprepossessing figure with hints of gray in his wavy black hair, he tends to think aloud, following desultory paths, looking for theoretical solutions to problems. If anything, his approach has become more abstract over the years. As a young software engineer, he solved problems as they arose, but now he likes to reflect on the nature of the eBay phenomenon and how it supports his philosophy. He often cites Adam Smith's doctrine that unrestrained market forces and self-interest drive the most efficient-and socially beneficial- use of resources. Omidyar sees Smith's principles at work in eBay; he believes that eBay's commercial success was linked to a profound social good. "I did an early investors' road show in the fall of 1997, and I went to New York and talked to some Wall Street folks, and I said, O.K., this is strangers from all over the country, sometimes internationally, and THE NEW YORKER, OCTOBER 30, 2006 67